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How does the crisis begin

Decreased purchasing power

Prices for essential products in stores begin to rise, while salaries remain at the same level. This financial situation is called the "overproduction crisis." The most serious crisis of overproduction occurred in the 30s in the United States and was called the “Great Depression”. Millions of Americans were on the street, and only the competent policy of President Franklin Roosevelt allowed to minimize the victims.

Currency fluctuations

Changes in quotes occur for several reasons. First, the instability (including bankruptcies) of large enterprises and entire countries causes the activity of stock exchange traders who earn on exchange rate fluctuations. A number of traders tend not to make money, but to minimize losses, understating prices for “unreliable” financial instruments, wanting to sell them sooner.
So the crises of 1987 (“Black Monday”) and 2008 were associated with excessive speculation by the Japanese currency (yen).The crisis (and exchange rate decline) is often also influenced by political events, especially wars.
According to Kondratieff’s theory, economics consists of cyclical periods lasting 40–60 years. Societies need recessions and crises to “reset” the financial system.

Bulk cuts

Due to a decrease in the purchasing power of the population, a number of enterprises lose their sales market, goods are not sold, the cash flow ends. You need to pay salaries, but there is no money. The "domino principle" works. The ruin of several large enterprises can cause the bankruptcy of all others.
If people remain on the street (in the newspapers this is often reported), this again leads to a decrease in purchasing power. All parts of the system are interconnected. Therefore, the crisis can affect even relatively economically prosperous sectors of the market.
Historians believe that the first economic crisis occurred in ancient Rome. It was caused by government debts and the short-sighted policy of "forced deflation."


The theory of "Anti-frailness" was proposed by American financier Nicholas Taleb.According to the theory, fragile financial systems rely on loans and leverage transactions (leverage, collateralized cash and liquidity systems), while anti-fragile trust cash and small investments in high-risk assets.
According to Taleb, the global financial crisis of 2008 was due to the fragility of new financial instruments - derivatives, credit bonds. Keeping track of popular stock market financial transactions can help determine the onset of a crisis more quickly.

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